Pessimism among Australian growers, stoked by unsettling
dryness heading into winter, has reversed, with many turned "wildly bullish" by
higher grain prices, and enjoying improved rains too.
The revival in Australian grain prices - which reached
Aus$291 a tonne in Sydney this week for January delivery, up more than 20% over
the last month - is "offering growers an unprecedented chance to take advantage
of some very healthy margins this year", National Australia Bank said.
Prices, which on a swap basis had reached Aus$280-330 a
tonne, "can have an excellent return on investment", the bank added, noting "wildly
bullish" sentiment among "farmers across the country".
Indeed, many growers have already cashed in on the higher prices,
with Rabobank noting that the rally had already "created significant interest in
mid-year marketing opportunities".
'Biggest July rain in
Rabobank's comments came as it downgraded, by 1.5m tonnes to
24.5m tonnes, its forecast for this year's Australian wheat crop, following dry
weather in many areas in, particularly, May.
Nonetheless, the forecast was higher than that of many other
commentators, including the official Abares commodities bureau, which last
month pegged the wheat harvest at 24.1m tonnes.
Rabobank estimated Australian wheat exports in 2012-13 at
21.0m tonnes, 500,000 tonnes above the Abares forecast.
Indeed, the country has received "widespread rainfall across
[its] key grain growing regions", Luke Mathews, at Commonwealth Bank of
Australia, said, flagging forecasts of more to come.
Weatherzone meteorologists have estimated that current rains
should bring at least 25mm-50mm across the Murray Darling Basin, with precipitation
of 10mm-20mm already recorded across many drier areas of New South Wales and
"[This] may turn out to be the biggest July rain in decades,
giving many farmers what they need to get winter crops thriving after a fairly
dry start to the season," Weatherzone said.
'Risk of a dry finish'
Separately, farm officials in South Australia said that June
rains had come in time to boost wheat sowings, albeit with much planted two
weeks or more beyond the ideal seeding window.
"The reduction in the area sown to wheat across the state
was not as great as anticipated prior to sowing," they said, estimating
plantings at 2.18m hectares, and the harvest at 3.6m tonnes.
And while the emergence of an El Nino weather pattern, which
tends to bring dryness to much of Australia, has been ringing alarm bells,
Rabobank downplayed the threat for 2012-13.
"The forecast likelihood of El Nino emerging… is strengthening,
which may increase the risk of a dry finish to the 2012 crop year," the bank
"However, given the favourable sub-soil moisture levels in
most regions, we do not expect a major crop failure this season."